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2019 Metro DC Area Housing Market Overview

What Do The Numbers Above Tell Us?

DC had the least growth followed by Montgomery County in Maryland. In Virginia, Arlington had an almost 10% hike for median sold price and Fairfax county comes in second place. rml_read_more]

However, as you can see, the number of units in Arlington are decreasing, which tells us that the homeowners were not selling! They are either renovating or holding the properties as investments. Because of the continued hike in Arlington property listings, buyers are moving towards outer counties such as Loudoun and Fairfax County or are waiting for better offers.

I predict this situation will continue until Arlington property homeowners realize that there are too many rentals available and not enough tenants to absorb these vacant properties.

What Happened in 2019 Nationwide?

In recent months, mortgage rates were influenced most heavily by economic data, Fed policy, and the trade talks with China. There was little news in December to change the investor outlook in any of these areas, and mortgage rates ended nearly unchanged.

The labor market continued to perform well. Against a consensus forecast of 90,000, the economy gained 128,000 jobs in October. In addition, prior results were adjusted upward by 95,000 jobs. A temporary strike by auto workers held back the level of job gains in October by about 40,000, but the year ended strong at 3.5% unemployment rate. Matching expectations, wages were 3.0% higher than a year ago, up from an annual rate of increase of 2.9% in November.

Consumer spending rebounded from a brief slowdown last month heading into the important holiday shopping season. In October, retail sales rose more than expected from September and were 3.1% higher than a year ago. The shift in favor of internet shopping continued as online spending showed large gains, while purchases at department stores declined.

Lower mortgage rates have been boosting recent activity in the housing sector. In October, sales of previously owned (existing) homes increased from September and were 5% higher than a year ago. National median existing-home prices were up 6% from a year ago. A lack of inventory remained an issue in many regions, as the number of homes for sale was at just a 3.9-month supply nationally, well below the 6.0-month supply which is considered a healthy balance between buyers and sellers.

However, there were signs that the pace of construction may be picking up, which could help ease tight inventory levels. In October, housing starts showing nice improvement from September and were 9% higher than a year ago.

Building permits, which are a leading indicator of future construction, posted even stronger monthly gains and were at the best level since May 2007.

The minutes from the October 30 Federal meeting released on November 20 reference earlier comments from Fed officials that further changes in monetary policy will be unlikely as long as the economy performs roughly as expected with modest growth and inflation near the Fed’s target level. Officials highlight uncertainty about the impact of trade tensions on global economic activity as a potential risk to the economic outlook.

After 18 months of government wrangling about Chinese purchases of U.S. goods and opening of its markets, investors are hopeful that the current pause in the trade war will be maintained. However, phase 2 of the US-China trade deal will be more challenging and less transparent. In the end, investors will most likely remain just as uncertain about the current level of progress in the trade talks.

The biggest economic release was the Employment report on December 6 of recent retail sales, inflation, manufacturing, and housing. In addition, news about the impeachment inquiry or the ongoing trade talks between the U.S. and China could influence mortgage rates. The last couple of weeks in December typically have very light trading volume which often leads to increased volatility.

Thoughts About The 2020 Housing Market

  • Working on the frontlines, we feel that the Spring market has already started in January, because of the influx of buyers who were left out from the summer market of the previous year due to the lack of inventory.
  • NRF forecasts that retail sales in 2019 will increase between 3.8 percent and 4.4 percent to more than $3.8 trillion. According to a new report from IHL Group, retail stores are definitely not going away. In fact, for each company closing stores, 5.2 companies are opening stores.
  • November unemployment rate was only 3.5%, and DC-VA-MD-WV Metropolitan Statistical Area non-farm job increase at 3,365,500 in October 2019, up 52,300, or 1.6 percent.
  • Amazon promised 25,000 jobs to Arlington and additional over 15,000 will be added in the next few years. The first 10 months of 2019, norther Virginia gained 19,500 jobs and its share of new jobs in the region jumped from 52%(2017) to 71%(2019)! NOVA offers more of what businesses like to see in deciding where to invest. The Virginia suburbs have more available land to develop, two airports, weaker unions, lower corporate and income taxes, and a generally more welcoming political climate.
  • 2020 is an election year. The housing market may stay flat in the first half year, however, should the Republican win the election, consumer confidence in economy growth for the next 4 years will likely drive housing market hike in the end of 2020.
  • Continue to see home buyers move to outskirts of the city. More job opportunities will allow workers to work remotely and this will drive the steady growth of the housing market rural areas such as Warrenton County (VA), Fauquier County (VA), Prince William County (VA), Howard County (MD), Frederick County (MD), PG County (MD).

Know or have a property that potentially suits my buyer clients’ needs?

  • Townhouse or SFH in McLean High School district, budget up to $900K
  • SFH in McLean High School district, built after 2007, budget up to $2M
  • Townhouse or SFH in Northern VA, home in any condition, can be sold as-is, to flip or rebuild, budget is up to $1M
  • Townhouse or SFH in Rockville or Bethesda, budget up to $850K

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